Javier Hernández The US Senator Elizabeth Warren is demanding a full investigation of what happened to make Silicon Valley Bank and Signature Bank go out of business. She says that Federal Reserve Chairman Jérôme Powell must take the blame for any mistakes made by the regulators about these banks.
Senator Elizabeth Warren Calls for Investigation Into Unexpected Bank Closures
Senator Elizabeth Warren recently wrote a letter to the Treasury Department, FDIC and Federal Reserve Board’s inspector general that asked for an investigation into the bank collapses that happened.
A senator from Massachusetts wrote a letter asking for a deep investigation of the problems which caused Silicon Valley Bank (SVB) and Signature Bank to fail this month. SVB was shut down by regulators on March 10 and Signature Bank was taken over by the New York State Department of Financial Services 2 days later. The results of the investigation need to be reported within 30 days.
Warren said these were very unusual cases: two of the country’s three biggest ever bank failures. And, if the Treasury Department, together with the Federal Reserve and FDIC (the Federal Deposit Insurance Corporation), had not stepped in to assure people their savings would be safe, this could have caused lots of economic problems for everyone.
Elizabeth Warren, a senator from Massachusetts, said that the executives of Silicon Valley Bank and Signature Bank take bad risks or fail to protect against known problems and this was allowed to happen because Congress and former President Donald Trump weakened some rules.
Senator Warren stated that the Federal Reserve, which was headed by Jerome Powell, lessened some of the regulations. She thinks that the people responsible for watching over Silicon Valley Bank, who worked at the Federal Reserve Bank of San Francisco didn’t spot or take notice of any issues/problems before it eventually went bankrupt. Furthermore, according to Senator Warren, when rules were loosened, this made going bankrupt pretty much unavoidable.
“It is really important that nobody interferes with your investigation. That means the bank executives and regulators responsible for what happened must not get involved. Fed Chair Jerome Powell especially shouldn’t interfere—he was in charge of regulations and supervision for these two banks, and he hasn’t done a great job.”
Senator Warren said in a statement that Chair Powell prevented regulators from discussing the mistakes that were made under his leadership. In an interview on NBC News Sunday, Senator Warren expressed her disapproval of this and said it would’ve shown “unacceptable behaviour” by Chair Powell if the reports were true.
“The person has had two jobs – one is dealing with how much money can be used, and the other is dealing with rules. He didn’t do well in either job so people are saying he should not be the leader of the Federal Reserve. Warren thinks that Silvergate Bank failed because there wasn’t enough protection from cryptocurrencies, and Signature Bank collapsed because it was too open with cryptocurrency clients.”
Do you agree with Senator Elizabeth Warren’s idea of having an independent investigation into why banks have recently failed and maybe even blaming Fed Chair Jerome Powell? Let us know what you think in the comments section!
